A discrepancy between the number of start-ups reported to be springing up by Companies House, and the actual number in working existence, has been discovered.
Of the 451,700 new registered limited companies in the year 2012/13, only 200,000 possess a company payroll scheme.
The payroll figure, which sits at less than half of the limited company statistic, has been discovered through a Freedom of Information request by online accountants Crunch.
Crunch’s figure of 200,000 is thought to be a more accurate representation of the actual amount of start-ups emerging in the UK.
Darren Fell, co-founder and managing director of Crunch, says, ‘We by no means wish to diminish the amazing work being done by UK start-ups – but as accountants we’re focused on accurate figures, and the reported numbers seemed a little on the high side compared to what we’re seeing on the ground.’
Commenting on the difference between a limited company and one with a PAYE scheme, Laura Hughes, accountancy training manager at Crunch, says, ‘A limited company may be formed for a number of reasons.
‘Many new companies are formed as subsidiaries or shell companies for existing organisations, either for operational or financial reasons.
‘Additionally, many companies are formed and made dormant – so-called ‘Shelf Companies’ – to be sold at a later date. These types of companies contribute essentially nothing to the wider economy, hence are not an accurate barometer of UK business activity.’
Crunch concludes that if the same ratio of incorporated companies are not trading in 2013/14, the actual number of start-ups in the UK this year stands at around 132,000, rather than the 300,000 publicly reported by Companies House.